Directors’ Connections, Financial Resources and Performance: An In-Depth Analysis of Canadian Companies

Saidatou Dicko, Hassan El Ibrami

Abstract

Despite numerous studies, there is still no consensus about the impact of the board on firm performance.Previous research has focused mainly on the economic and financial aspects of the director’s role, but scantattention has been paid to its relational aspect. Some authors have suggested that directors’ social networks(connections) could be used to help the firm acquire external resources. This paper delves into the impact ofthree types of director connections on the firm’s resources and financial performance. Based on a random sampleof Canadian firms, our results show that directors’ economic and political connections have a positive andsignificant impact on firm debt and that each type of connection they have (economic, political and social)affects firm financial performance.

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